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FSBO

Before you consider selling your home yourself I ask you to read the following information.

The main reason sellers consider selling their home as for sale by owner (FSBO), is to save money and get the highest NET. Below I outline why this may just cost you money instead of meeting the desired outcome, which is to net more money.

The top four reasons to hire a Realtor are:

  1. Higher Net Return - with a Realtor Sellers receive a higher net return.
  2. Exposure For Property - with Buyers starting their real estate search on the internet 76% of the time exposure is critical.
  3. Marketing Expertise - you don't get a second chance to make a first impression.
  4. Reduce Legal Exposure - Realtors know the laws and liabilities, the last thing you want to do after you sell your home is to have to hear about it in the future.

The following goes through almost every reason, logic and configuration in listing your home as a FSBO. At the end of this information if you are still not swayed and wish to sell your home yourself I have provided links to some of the better FSBO listing services.

There are a couple of ways to sell your home as a For Sale By Owner or as commonly known by the acronym FSBO, I'll list them from the least to most expensive .

Options #1 + #2 pay 0%, i.e. $0 in commission!

Option #1:

For under $10 get a yard sign and stick it in the front yard.

Your goal being to snag a passerby that happens to:
  1. Not have an agent
  2. Is ready to buy
  3. Is willing to pay your price!

How great would that be! Can you read the headlines now... "House sells. Marketing maxes out at $8, seller saves $19,992." (Also note that Craigslist is free too, so maybe you can use that, but watch out, those damn Realtors will flood your inbox with spam, telling you how they can "help" you.

Option #2:

$100-$350 via ForSaleByOwner.com (avoid the $600 and up plans)
Starting at $90 you can buy a month on the website ForSaleByOwner.com or for $350 you can get the all-you-can-eat-leave-it-until-it-sells-plan. On the site you will see higher up sell services (not counting MLS, I'll get to that) that go up to $900 that claim to "feature" your listing or rebroadcast your listing to another 20 sites. You don't need to be "featured" on this site since people buy with specific searches (price range and house size and area), they will find your listing. This site is the powerhouse leader, probably with 95% FSBO traffic market share, so don't bother with any other FSBO site (except Craigslist and in some places MilitaryByOwner.com). If there is an option for more photos, I would max that out.

So it sounds too good to be true? Is it? Here are some things to consider!

Put yourself into the shoes of a buyer. If you see a FSBO sign, what is the first thing that pops into your head?

Either

  1. I bet they overpriced it (which is why a buyer’s agent can help you) or more likely
  2. “Great! I can save on Realtor fees and get a bargain.” But wait a second, I thought the SELLER’s entire point of doing FSBO was to save the commissions?

Well if your main buyer audience is without a Realtor and looking for bargains, they will not only expect the 6% off the top, they will start even lower than that. Oh of course you can say “no,” but you get my point right? These types of buyers tend to be the bottom feeders and bargain shoppers.

Fewer Prospects Lead to a Lower Price

Now on to ECON 101. Supply and Demand.

Do you agree that by just putting a sign in the front yard, you probably only reach about 2-5% of the possible buyer audience? Ok maybe you live directly on one of those coveted main highway houses, but for the most part, I’d say 90% of
buyers and their agents will use the MLS via the internet.

I always say it takes 4 interested parties to hopefully get 2 serious offers and that is what gets you the best price. But if only 2-10% of buyers see your home, getting the best price will rarely happen. I’d say your chance of getting top dollar and selling it are around 5% or 1 chance in 20 FSBOs that attempt it. I could show you stats, but I don’t believe in them, so just agree or disagree with my guess. We will go over later the pros and cons around “lets just try it, it can’t hurt” approach, which CAN hurt.

90% of buyers have buyer agents

If you are FSBO offering 0% buyer agent commission, you generally exclude 90% of buyers,even if they did find you.

A couple analogies... If you take a Rolex to a flee market, no matter how nice that Rolex is, no matter how good you can negotiate, will you get anywhere near what is a "fair” price?

Too extreme of an example? Ok, I gotcha, how about this... Selling a used car? The dealer can get so much more for the same car than you can get on your own. They add some staging, better marketing, and a name to back it. I'm not saying to trade in your car, I'm just saying that we understand that a dealer sold used car will go for 5-10% more (in part because people buying a car by owner, they do it so that THE BUYER gets the saving) The buyer's goal is to offer just a few hundred over what the seller might have received with a trade in. Sound familiar?

Only offer a commission to the buyer agents!

They are the important ones right? They bring the buyer right?

Option #3:

Just pay the Buyer’s Agent! Cut out the Listing Agent! Save $10,000

Quasi FSBO "Flat Fee MLS" for $200-400

If you are going to offer money to a buyer agent, you’d be a fool to not spend another $200-400 to get your house on the MLS via a “Flat fee MLS” service. This service’s main goal is to get you on the MLS for a flat fee, regardless of whether you sell it or not. Meanwhile a commission is published for the buyer agent and you get on the MLS and you get the exposure! Therefore wiping out 2 of the 3 hurdles above!

Ok, so maybe just pay the buyer agent! They have the buyers right? They are the only ones that really add value, right? Oh and don't let the listing agent fool you with their Realtor Trick; ads that say: "I have buyers, let me list your house." That makes NO sense! If you have buyers, you are the buyer agent (the important one right?), so bring your buyer, why should you also get a listing fee?

Well I’ll go on record saying you are an idiot if you don’t offer what is the norm in the area. I don’t care if it is bidding war season and you can sell your house in 3 days. You will get MORE with a larger audience of buyers. I know it might initially seem like a rip off.

I know from your perspective, you could give $5,000 or 1% of your $500,000 and all you saw the Realtor do is walk in with a client for 30 minutes. That is $10,000 an hour. Well I wish. You miss the 20 homes that Realtor was schlepping the client around to previously, or the broker fee which is as much as 55% (45% to the agent) and another 25-50% taken out for referral fees or mentoring fees. I saw one agent’s $10,000 commission literally result in a $2,200 check to her. I know that it isn't your fault and you shouldn’t have to pay for the 19 homes they saw previously, but bottom line is your neighbors are all giving X, and if you give X divided by 2, you will disincentivize (home made word) Realtors. I love these homes for my clients since I know nobody goes into them, we can get a better deal!! Hooray for idiots! Idiots = good deal, scratch that “better deal”.

Ok so now you have mastered the above hurdles and you are all set with taking the flat fee option and paying $400 plus 3% to the buyer.

Remember the goal is to get the highest NET

Here are some problems with flat fee MLS

Realtors hate FSBOs. Quasi-FSBOs that are on the MLS aren’t as bad as regular FSBOs, but they tend to be a major pain. Why?

In part because they tend to not understand the process.

Now you can be the best FSBO and sharpest “getting it” person out there, but the problem is the buyer agent doesn’t know that. Instead they get a pit in their stomach and subconsciously and they hope the buyers don’t like your house.

True story: I was showing a client 5 homes in one community. One was a Quasi-FSBO. Initially I had no problem with it. But then the hassle began. The MLS remarks said to call first. There were 3 numbers. I called all 3. No answer and no messages about the house being available to see. And then there was a car in the driveway, so do I go in or wait? Then the lockbox was old and jammed. So before I get into the house where I wonder if I am going to walk in on somebody in the shower, I was already praying that my buyers wouldn’t like the place. I thought to myself that this seller doesn’t “get it” and will be 10x the pain in the neck of a properly listed house with a listing agent. Sure enough the buyers also got frustrated before going inside and they didn’t like it. Oh and it was overpriced too, go figure!

With no listing agent, the buyer agent does twice the work for the same pay. Given two identical homes at the same price, most agents will prefer to work with a listing agent.

I know you think all we do is push papers, but the job is about twice as hard without a middle man in the process. Not to mention, our liability triples. FSBOs that don’t get the process are more likely to sue and continue the headaches.

The buyer agent and the buyers will see that it is a Quasi FSBO and again (see above) the BUYER attempts to save the 3%. If I see a Quasi FSBO, the first thing that goes through my head is “this seller has already done the math and is thinking “if I get at least 97%, then I effectively have gotten full list since I saved by not getting a listing agent.” So my (and many agent’s) new baseline will be 3% lower and THEN the price drops (lower offers) start lower from that adjusted lower price.

Getting the highest NET is still our agreed #1 goal right? OK bear with me.

The best way to sell a home is to put your BEST effort forward all at once. Ever heard the expression, “You only have one chance to give a first impression?” well that applies to house selling as well. If all of your marketing and staging and amazing photos all hit at once, then you can get the 2-4 buyers interested at once and that is what gets you top dollar. If you indolently use the above methods because you wanted to “lets just see what happens” you become a stale listing. The magic is dead. (this is more about doing the Flat Fee MLS and less about the yard sign, since virtually nobody sees that anyway)

Ok, so what now???

Find a great discount agent

This is where Empire Realty is here to help you!

With Empire Realty’s Premium Full Service at a DISCOUNT, you will save 25% on commissions and still get all the benefits of a full service Realtor. Visit us at http://www.empireteam.com

View our complete marketing plan at http://www.empireteam.com/selling.php

Full Priced Realtor’s words on discount Realtors, Don’t believe it!

Full Priced Realtors common response 1

But not all discounted agents are created equal. You might get a great one, but if he was so great, wouldn’t he want to try to charge more in order to outpace the $17,000 average annual salary of a Realtor? One great line I heard once was “If they can’t ne gotiate their commissions well, how good will they be at negotiating and maintaining the list price?” I normally hate all “big company” pitches, but I like that one.

Full Priced Realtors common response 2

Maybe the agent makes up for the lower commission on volume? Sounds great, but when they are faced with a possible 2 week negotiation, is that agent going to take the extra time to fight to get you that last $10,000 for the client? They sure as hell don’t do it for the $100 or $200 extra commission.

Ok, so what about a “full service” non discounted agent? Is that the best route?

Oftentimes NO!! Sorry, but even many of those agents are lacking. And what I love is when a brand spanking new agent goes after a $500,000 listing and tries to get a “full” (as they call it), commission.

REALTOR TRICK: One of the “big three” company training procedures is for the new agent to walk into the listing with the listing agreement pre-filled in with a 7%. They then dramatically slash the price and put 6%, as if you are getting a deal.

So to recap, would you rather decrease your net by bypassing fees, or would you rather NET more and remove the hassle factor or doing it yourself by hiring Empire Realty? If your answer is still the former I have provided some links to assist you in the sale of your home.

10 Reasons to sell your home yourself – For Sale By Owner (FSBO)

  1. - I love answering the door at 11PM, in my PJ’s.
  2. - I love people stealing my treasures.
  3. - I love receiving 50 offers at 6% below my asking price.
  4. - l love people peeking into my bedroom window at 8 AM Sunday morning.
  5. - I love having my neighbor ask if I will finance his cousin; the one that just finished bankruptcy.
  6. - I love the idea of trading my home for a junker.
  7. - I love the Realtors that drop in to pitch me on using them.
  8. - I love having Realtors spouses telling me I should meet a real pro, the one who I refer to in #7 above.
  9. - I love making signs and flyers.
  10. - I love telling everyone that drops by the 100 fine features of my home.

Bonus: I love finding out I sold my home at 17% under real market value.


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